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Fresh water is becoming a scarce resource in the United States and across the globe as demand continues to rise due to population and business growth. This emergent scarcity means businesses will face more consequences of the complex regulatory and legal frameworks governing water use and water quality.

Michael Best’s Water team understands those issues. We guide clients through the heavily regulated, politically sensitive environment surrounding the management of, investment in, and development of water resources.

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From artificial intelligence (AI) and machine learning to autonomous vehicles, virtual reality, and cryptocurrency, the rapid evolution of technology shows no sign of slowing down. Companies in the digital technology sector are among the world’s most highly valued companies, with good reason. And businesses in every sector now use digital technology in all kinds of ways, from basic email to sophisticated data analytics.

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In today’s rapidly changing market, you need an intellectual property team that will enhance and safeguard your competitive position. Our nationally recognized IP practice offers three key advantages: we know your business; we understand your technology; and we have the advocacy skills to help you develop, manage, and protect your intellectual assets.

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On February 6, the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers (the Corps) finalized a rule that added an applicability date to the “Waters of the United States” (WOTUS) rule. Under this final rule, the 2015 WOTUS rule will not take effect nationwide for two years. The move is the first step in the Trump Administration’s plan to roll back the 2015 rule and replace it with a new rule that onlookers expect will almost certainly take a more restrictive view of federal jurisdiction over intrastate water resources.

Background

The “Waters of the United States” rule was a major rulemaking effort of two federal agencies (the Corps and EPA) that came to a head during President Obama’s second term. The Clean Water Act provides for federal jurisdiction over “navigable waters,” a term which is defined by the Act to mean the “waters of the United States.” Congress did not further define this term. As a result, the reach of the Clean Water Act, and in turn, the federal government’s authority to regulate waterways and wetlands, depends on how the agencies tasked with administering the Act define “waters of the United States.”

The reach of the Clean Water Act has been a hotly contested issue for more than two decades. Recent litigation has made it difficult for courts and the regulated community to determine whether a water or wetland is subject to federal government oversight. Most recently, the U.S. Supreme Court’s 2006 decision in Rapanos v. United States left the country with two competing tests for determining if a water is subject to the federal government’s jurisdiction under the Clean Water Act. In that case, a fractured Supreme Court could not agree on one standard, leaving the lower courts to sort out the law.

Challenges to the Rule

First proposed in 2014, the WOTUS rule was met with opposition by a broad range of industry interests. Specifically, groups expressed concerns that the rule could extend federal jurisdiction to intermittent streams, ditches, and low-lying areas.

Developers and builders objected to the rule because of its potential to greatly expand the number of acres subject to federal jurisdiction. For example, one estimate concluded that the proposal would increase the stream miles covered by 130 percent. Commenters expressed fears that many properties could become subject to burdensome and costly federal permitting requirements or be effectively rendered off-limits for development.

The agriculture community also expressed concerns throughout the comment period. While the Clean Water Act contains an exemption for “normal farming activities,” that provision has traditionally been construed narrowly, leading to fears that the definition could require farmers to obtain federal permits to complete routine farming activities.

For their part, EPA and the Corps resisted these characterizations, saying that the rule would result in only modest increases in federal jurisdiction. EPA and the Corps published the final WOTUS rule in June 2015, and judicial challenges to the rule were filed in federal courts across the country.

After challenges were filed, a dispute quickly arose as to which federal court (a federal court of appeals or a federal district court) was the appropriate venue for the challenge. While the court system worked to sort out this question, the Sixth Circuit Court of Appeals consolidated some of the challenges and issued a nationwide stay, postponing the rule’s effect. The jurisdictional challenge moved on, and on January 22, 2018, the U.S. Supreme Court unanimously ruled that the federal district courts were the proper home for the challenges.

As a result, the Sixth Circuit stay will likely be lifted in the coming weeks. While the district courts have stayed the rule’s application in some states pending the outcome of the litigation, no lower court has yet acted to issue a nationwide stay.

Administrative Delay

Anticipating that the rule might take effect in certain states if a nationwide stay is lifted, the Trump Administration developed a two-step plan to revisit the WOTUS rule. The first step in this process is the final rule published on February 6. By delaying the rule’s application for two years, the agencies ensure that no portion of the nation is subject to the 2015 rule while the court battle over its legality plays out. In the second step of this two-part process, the agencies would use the two-year window to reconsider the regulatory definition of “waters of the United States” and promulgate a new rule.

The Trump Administration’s revised definition of “waters of the United States” will almost certainly take a more restrictive view of federal authority over intrastate water resources. Several states and industry groups have urged EPA and the Corps to adopt a definition of the waters of the United States more consistent with the plurality opinion in Rapanos. That approach would define waters of the United States to include “only those relatively permanent, standing or continuously flowing bodies of water” and not channels where water flows only “intermittently or ephemerally,” or which periodically provide drainage for rainfall. This means that for federal jurisdiction to exist over wholly intrastate wetlands, the wetland would need to demonstrate a “continuous surface connection” to a jurisdictional water—that is, a relatively permanent body of water that connects to traditional interstate navigable waters.

What’s Next?

For now, it remains to be seen whether challenges to the 2015 rule will actively continue, or whether litigants will wait for further action by the Trump Administration. Delaying the application of the 2015 rule and issuing a new WOTUS rule are two actions that are likely to spawn (even more) litigation in the federal courts, leaving uncertainty that could spill over into the next presidential term. Environmental groups are already announcing plans to sue over the EPA and Corps’ decision to delay application of the 2015 rule. In sum, there will not likely be clarity with respect to the federal government’s permitting authority over certain water resources for several years.

Closer to home, it is important to remember that the WOTUS rule (whatever the final result) does not impact a state’s authority to regulate water resources, except where states directly reference the federal standard.

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Taylor brings a diverse background in environmental and agricultural matters to his practice at Michael Best. He is well versed in environmental regulatory processes as well as emerging topics and issues faced by the Midwest’s agribusiness industry.

With more than 30 years of experience in environmental law and litigation, John brings a unique background and perspective to his role as a partner at Michael Best from having served in government at the United States Department of Justice and now representing clients in private practice.

Leah takes a big-picture approach in advising clients as they face challenges on environmental, food safety and regulatory compliance issues. She draws on experience gained in cases involving the EPA, FDA and other public agencies. Leah’s success as a counselor, litigator and negotiator reflects her combination of subject matter expertise, industry knowledge and creativity.

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